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AGO Opinion: Time Limits for VAT Refund Evidence to Non-Resident Taxable Persons - C-746/22 Case Update - My Vat Calculator

AGO Opinion: Time Limits for VAT Refund Evidence to Non-Resident Taxable Persons – C-746/22 Case Update

"Slovakian Company Seeks Refund of Input Tax in Hungarian Case: Tax Authority Demands Further Information"

Hungarian Tax Case Raises Questions on VAT Refund Process

In a recent case from Hungary, Slovenské Energetické Strojárne, a company established in Slovakia, has filed a claim for a refund of input tax incurred in Hungary under Directive 2008/9. The Slovakian taxpayer had carried out works in Hungary, incurred VAT, and submitted a claim for refund. However, the tax authority requested further information within a one-month period, and subsequently closed the proceedings without granting the refund. The taxpayer then submitted the requested information, but the claim was still refused. As a result, three questions were referred to the European Court for clarification.

The second question referred to the interpretation of Article 20(2) of Directive 2008/9, which the Advocate General (AG) suggested is not mandatory. This raised concerns about the applicability and enforceability of the provision. The first question raised concerns the compatibility with EU law of a provision of national law which excludes the possibility of relying on additional information in appeal proceedings. This provision hindered the taxpayer’s ability to present crucial evidence to support their claim. The third question focused on the discontinuation of the refund application in domestic legislation and its compatibility with Article 23 of Directive 2008/09 on the appeals process. The AG suggested that while Article 23 does not preclude domestic legislation from discontinuing the refund application, there must be an effective procedure for appealing against the decision.

These questions highlight the complexities and challenges faced by taxpayers when seeking VAT refunds across EU member states. The case also raises concerns about the lack of harmonization and uniformity in the VAT refund process, which can create obstacles for businesses operating in multiple jurisdictions. The outcome of this case will have implications for both taxpayers and tax authorities, as it will provide clarity on the interpretation and application of key provisions in Directive 2008/9.

The European Court’s ruling in this case will be eagerly awaited by tax professionals and businesses alike. It is hoped that the court’s decision will provide clear guidance on the obligations of tax authorities and the rights of taxpayers in the VAT refund process. This would contribute to a more streamlined and efficient system, reducing the administrative burden and ensuring fair treatment for taxpayers.

In the meantime, businesses operating in multiple EU member states should be aware of the potential challenges and uncertainties surrounding VAT refunds. It is essential to stay informed about the latest developments in VAT legislation and seek professional advice to ensure compliance and maximize the chances of successful refund claims. Furthermore, businesses should maintain detailed records and documentation to support their claims, as this can significantly strengthen their position in the event of a dispute or appeal.

Efforts towards harmonization and simplification of the VAT refund process at the EU level should also be encouraged. This would not only benefit businesses but also enhance the functioning of the internal market, promoting cross-border trade and economic growth. The European Commission and member states should work together to address the existing challenges and create a more efficient and transparent VAT refund system.

In conclusion, the Hungarian tax case involving Slovenské Energetické Strojárne highlights the complexities and uncertainties surrounding the VAT refund process in the EU. The questions referred to the European Court raise important issues regarding the interpretation and application of key provisions in Directive 2008/9. The court’s ruling in this case will provide much-needed clarity and guidance for both taxpayers and tax authorities. In the meantime, businesses should stay informed, seek professional advice, and maintain detailed records to ensure compliance and maximize their chances of successful refund claims. Efforts towards harmonization and simplification of the VAT refund process should also be pursued to enhance the functioning of the internal market and promote economic growth.

Barry Caldwell

Barry Caldwell

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